A fuel cell is essentially a battery using an external fuel supply, connected to an electric motor. Electrodes within the cell house a catalytic reaction where the fuel and oxidant are electrochemically transformed, producing DC power, water and heat. Hydrogen is the cleanest and most efficient fuel for a fuel cell-powered vehicle in the long term but several other fuels are being investigated as shorter-term hydrogen carriers.

Methanol powered fuel cells should reduce greenhouse gas (GHG) emissions substantially, perhaps as much as 50% when fully optimized. If the methanol fuel is produced from cellulose, the reductions can be even greater.

Studies have demonstrated that fuel cells have the potential to more than double vehicle fuel efficiency levels achieved by internal combustion engines. At the same time, they have the potential to virtually eliminate many conventional pollutants. Carbon monoxide and Volatile Oraginc Compounds (VOCs), for example, are almost entirely eliminated in fuel cells. Further, since fuel cells operate at much lower temperatures than internal combustion engines, NOx emissions are extremely low.

Costs remain extremely high-far from competitive even with natural gas or methanol-fueled vehicles. Current research is focused on improving fuel cell size, lowering costs and developing efficient, compact and responsive on-board fuel reformers that would provide the needed hydrogen.

Automobiles powered by fuel cells have been demonstrated and a small number are in operation worldwide, but widespread commercialization is not expected for several years. DaimlerChrysler has announced its intention to begin producing fuel cell vehicles by about 2004; Honda may do so in the same approximate time frame. Over the longer term, fuel cells could offer the auto industry near-zero emission vehicles with long ranges, good performance and rapid refueling.